Eastern European Nations Fear Rift With Richer Neighbors

Politicians agreed they don't want divisions in the EU, but internal conflict continues EU leaders tried to overcome their differences on how to address the ongoing economic crisis as protectionism fears and calls for aid from smaller members raised warnings of a "new iron curtain" in Europe.

Heads of state and government met in Brussels on Sunday, March 1, in an effort to agree on a common European response to the continuing global financial crisis that has pushed the EU into a deep recession.

The EU leaders are ready to commit to putting their single market at the heart of their recovery plans and emphasize that EU efforts to promote open markets are reflected elsewhere, according to a draft summit statement.

The draft being discussed by EU leaders stressed that the bloc's single market is "the engine for recovery to support growth and jobs."

EU leaders were also to use the summit to hammer out a common position to take to a meeting of leaders from the 20 biggest economic powers in London on April 2. Czech Prime Minister Mirek Topolanek said Sunday that EU leaders would meet with US President Barack Obama in Prague three days after the G20 meeting.

Sharing the burden

German carmaker Opel is among those looking for help

Upon his arrival in Brussels, Swedish Prime Minister Fredrik Reinfeldt said, "We should not be taking jobs from each other."

The main split in the union is between rich countries, which want strong action to support industry -- particularly carmakers, and poorer nations -- largely located in eastern and central Europe, who cannot afford massive industry bail-outs.

Eastern European nations have also been especially hard hit by the crisis. Hungary's Prime Minister Ferenc Gyurcsany said the time had come for richer EU members to show their solidarity with poorer countries.

"We should not allow a new iron curtain to be set up and divide Europe in two parts," he warned, proposing a fund worth up to 190 billion euros ($240 billion).

His proposal is substantially more than the 24.5 billion euros in aid that international institutions agreed on Friday to make available to eastern European countries to help them cope with the crisis. Eastern and central European economies are often dependent on credit from Western sources, which has become nearly impossible to receive.

No special treatment

Merkel said international aid should be looked at on a case-by-case basis

But there was little sympathy for the Hungarian proposal. The European Union's current Czech presidency ruled out special treatment for the region.

"I don't believe that it is necessary now to separate several countries in the European Union," the Czech Republic's Topolanek told journalists as he arrived to chair the emergency EU summit. "I will support an individual approach of the European Union to help and support any countries or European countries, (and) not especially eastern Europe."

As the leader of the 27-member bloc's largest economy, German Chancellor Angela Merkel said her country was in favor of helping European countries on a case to case basis but she has not detailed how aid would be provided. Berlin has resisted calls for a euro-zone bond to raise money for suffering countries in the shared currency zone.

Merkel, who arrived late to the summit due to technical difficulties with her government plane, said the bloc could not afford to lump countries together solely according to their geographic location. She said "the situation is very different" from one eastern European nation to another, and warned of starting a debate including "massive figures" of support for the region.

Auto industry protectionism

Sarkozy's plan to help French carmakers has some worried

Many eastern European countries are also growing increasingly concerned about the possible return of protectionism. French President Nicolas Sarkozy made aid to its car sector conditional on companies not moving production to the region and said French carmakers should work to preserve jobs in France.

Although the European Commission deemed the French auto package on Saturday to be free of protectionism, fears of governments deciding to bail out their industries at the expense of others were not diminished.

"Always we must resist the temptation of protectionism," Polish Prime Minister Donald Tusk told journalists after meeting of leaders from nine eastern European countries that took place ahead of the major summit.